Big fund companies have many ways to increase the returns of young funds that they want to promote. And at least one of those games involves popular offerings.

To economists, prices serve as crucial signals to producers and consumers. In a regulated market, the state sets prices high enough for private companies to cover their costs and earn a guaranteed profit for their investors. But in a deregulated market, prices should vary with demand and supply.

As the Nasdaq soared in 1999 and early 2000, demand for many offerings far exceeded the supply of shares available at the initial offering price.

Alex Berenson Quotes